Business Plan On TFK’s The Ethnic Food Restaurant
Prepared By: RISHABH KEDIA ROHAN SRIVASTAVA TARUN SRIVASTAVA VARUN MISHRA MBA-2ND Sem (Corporate Management)
___________________________________________ IMS University of Lucknow
Plan Outline • • • 1. Executive Summary 2. Preliminary requirements for starting a new restaurant 3. Company Summary 4. Services 5. Market Analysis Summary 6. Strategy and Implementation Summary 7. Web Plan Summary 8. Management Summary 9. Financial Plan o o
Investment Opportunities Important Assumptions
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General Assumptions Risk Analysis/Mitigation Break-even Analysis Profit and Loss Statement
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Cash Flow Statement Cash Flow Balance Sheet Statement
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Balance Sheet Business Ratios
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10.Expansion, Payback & Exit Strategy
ACKNOWLEDGEMENT The Team TFK’s is very grateful for the kind co operation and guidance of Esteemed Mentor Mr. Aseem Rastogi , who not only guided us but also helped us from time to time in times of doubt and through his able and kind guidance only, we were able to create this business plan. We are also very thankful to Mr. V K Tripathi, Manager Madhurmilan Restaurant and Mr. Abhinav Dwivedi, Manager(Finance),The Taj Hotel, Lucknow for their kind support and help in the preparation of this business plan, without their support the plan creation wouldn’t have been so spontaneous and satisfactory.
Executive Summary Our initial statement to Investors and Financial Lenders is a candid disclosure of the TFK’s Restaurant & Lounge business proposal - our intent is to set realistic business expectations, and eliminate any questions about the profitability of this business venture. Entrepreneurs have a tendency to paint the business plan with a very optimistic brush, highlighting strengths and camouflaging the risks. We, as business owners, have a vested stake and financial commitment in the success of this restaurant. Our intent is to have a definitive business, financial, and marketing plan that not only serves our need for capital financing, but is utilized as our daily business roadmap. We have taken all precautions to validate our business and financial models, focusing on realistic projections. We have accomplished this as follows:
1.
Our financial model is rooted in industry facts, not optimism. We have based costs on our vast industry and practical experience with similar ventures, validation against National Restaurant industry cost averages, and analysis against local U.P market averages. We have taken a collective look at all figures to make solid business estimates.
2.
Our business concept was derived from detailed Market Analysis. Instead of building a business around a preconceived concept, we analyzed the market findings and built a concept around our consumers. In other words, our business is built to service an unmet consumer 'want'.
3.
A buffered financial plan that ensures adequate capitalization. A contingency buffer is included in the start-up cost to ensure the business in not under financed, as well as giving the business adequate funding to sustain it in the first six months of start-up. Our industry experience confirms a longer ramp-up stage for restaurants over other retail/service businesses. A common mistake for new entrepreneurs, but fully addressed in this business plan.
4.
A solid Risk Mitigation Plan. We have evaluated traditional and non-traditional risks associated with Restaurant failure and accounted for them directly in the business plan. Instead of dismissing the risks, we have identified valid mitigation strategies for each.
5.
Deep Management Experience. Our management team has 20 years combined experience, involved with over 86 restaurant openings, and deep involvement with the U.P restaurant industry. The total capital requirement to launch TFK’s Restaurant & Lounge is Rs.20,00,000 of which Rs.17,58,449 is allocated to start-up capital, and Rs.2,41,551 as business operations cash reserve. Owners, Mr. Varun Mishra, Mr. Rishabh Kedia, Mr. Tarun Srivastava
and Mr. Rohan
Srivastava are investing Rs.5,00,000 in personal capital. As owners, our commitment is to take personal accountability for all financial debt. We have taken the necessary precautions to ensure the business is fully capitalized, and have addressed all financial shortfalls to ensure a successful business start-up. Even with the worst-case sales scenario, we reach a Net Worth break even at the end of Year 5.
o o o
Preliminary requirements For Starting a New restaurant Before making a business plan to start a restaurant some necessary details must be acquired and a number of technical licenses have to be obtained, and renewed from time to time.
At the plot or building where in the restaurant has to be constructed, before the license is granted a sample of water must be taken by the food inspector for testing the permissible levels of water purity, only then a license is granted for opening a restaurant. Then a license fee of Rs 30 is deposited for the license of opening a restaurant, here there are 3 licenses that need to be taken.
• License for starting a “JAL PAAN GRAH” • License for providing beverages like bottled cold drinks and mineral water • License for providing food made by “VANASPATI GHEE” 1. These licenses are renewed on an yearly basis. 2. Further we have to get the labour registration from the Labour Department for all the staff members working for us, this is again renewed every 5 years. 3. Registration at the nearest fire station also needs to be taken and renewed every 5 years. 4. To be on the safer side we must keep “Pukka Bills” of all consumables for three years at least, to keep a strict quality check on the items produced and consumed in the production purpose.
TFK’s at a glance Objectives TFK’s Restaurant & Lounge's objectives for the first three years of operation include: • • •
• • • •
Keeping food costs at less than 35% of revenue. Keeping employee labor cost between 37-39% of total sales. Remaining a small, unique restaurant with eclectic food and service. Averaging sales between Rs.30,00,000 – 45,00,000 per year. Promoting and expanding the TFK’s restaurant concept as a unique Lucknow destination restaurant. Expanding our marketing and advertising in U.P and in the neighboring suburbs to increase our customer base. Achieving a profitable investment return for investors for Years 2 - 6.
Mission • TFK’s will be an inspiring restaurant, combining an eclectic atmosphere with excellent
and interesting food. The mission is to have not only a great food selection, but also efficient and superior service - customer satisfaction is our paramount objective. TFK’S will be the restaurant of choice for a mature and adult crowd, couples and singles, young and old, male or female. • Employee welfare, participation, and training are equally important to our success. Everyone is treated fairly and with the utmost respect. Our employees will feel a part of the success of TFK’S Restaurant & Lounge. • Our concept combines variety, ambiance, entertainment and a superior staff to create a sense of 'place' in order to reach our goal of overall value in the dining/entertainment experience. We offer fair profits for the owners, and a rewarding place to work for the employees.
Keys to Success 1.
Unique, Innovative & Contemporary: The creation of a unique and innovative fine dining atmosphere will differentiate us from the competition. The restaurant will stand out from the other restaurants in the area because of the unique design and decor. We will offer a fine dining experience in an electric atmosphere.
2.
Product quality: great food, great service and atmosphere.
3.
‘Spice of Life’ Menu: The menu will appeal to a wide and varied clientele. Our eclectic menu features regional specialties around the globe, from Spanish ceviche, to Thai and Indian curries.
4.
Employee Retention Focus: Employee retention and development programs will be a primary focus and success platform for this business. Through these programs, we will be able to draw seasoned and elite professionals and build a committed work force. We have budgeted for a stock option program for Chef and Management positions to subsidize a lower salary base. This lowers our immediate overhead and attracts quality staff.
5.
Cost Control Focus: We will control costs at all times, without exception. Cost Control will be an integrated function of the restaurant from the onset. Cost control is about managing the numbers - interpreting and comparing the numbers that impact the bottom line. 80 percent of the success of a restaurant is determined before it opens. Our focus is to reduce the cost of goods sold to meet our profit margin goals by managing the following crucial elements of cost: Purchasing, Receiving, Storage, Issuing Inventory, Rough Preparation, Service Preparation, Portioning, Order Taking, Cash Receipts, Bank Deposits and Accounts Payable.
Due to intense competition, restaurateurs’ must look for ways to differentiate their business to achieve and maintain a competitive advantage. Lucknow/Downtown U.P's redevelopment requires a place that will fit into the 'new look' of the community, one that is contemporary and entertaining. TFK’S will fill that niche.
Company Summary What is TFK’s? TFK’s is the destination for the ethnic food corner that enables the superior value through the food. Our outlet also provides excellent and friendly customer service to support the ambience of fun, energetic and youthful lifestyle.
The Design TFK’S Restaurant & Lounge is unique to Lucknow U.P. The restaurant features 3 venues in one (A concept called as Multi-Branding'): 1. A TFK’s Lounge, 2. TFK’s Cosmopolitan Bar, 3. And TFK’s Full Service Dining. This concept offers customers variety, offering multiple dining and entertainment options within a single establishment. The spatial and menu divisions will broaden our appeal and provide our customers with a different experience on each visit. The atmosphere caters to a young but mature adult crowd. This is not a family dining establishment. Total space requirements are 3,000 square feet. In total, the restaurant will provide seating for 110 patrons. Where possible, consideration will be given to incorporate a dining patio. Zoning, parking, and accessibility issues will be reviewed as key criteria. We will draw on our Advisory Board as part of the site selection and lease negotiation.
The Menu TFK’S is focused on servicing U.P's growing demand for an ethnic eating experience. For lack of a better term we are launching a multi-ethnic' cuisine restaurant - a restaurant concept that responds to U.P's need for selection and choice. TFK’S is a complimentary mingling of international cuisine on a single menu. The Lucknow demographics fit this concept perfectly.
Quality food Each store will offer nothing but freshly fried rice, sandwiches and variety of unique blend sauces, all served with old-fashioned home-style care.
Variety, variety, variety A different selection of sauces will be featured every three months and we will also change our Italian soda flavors to accompany our fries.
The Management Our management team has over 20 years combined experience in food, restaurant and hotel, business management, finance, and marketing arenas.
Company Ownership The restaurant will start out as an LLC(Limited Liability Company) corporation, owned by its founders, Varun Mishra, Rishabh Kedia, Tarun Srivastava and Rohan Srivastava.Mr. Rishabh will function as the General Manager and Executive Chef, and Mr. Varun as Managing Partner. Mr. Varun, Mr. Rohan, Mr. Tarun and Mr. Rishabh have a long-standing professional relationship in the restaurant industry, stemming back to Madhurmilan,Lucknow,UP,India. We are accomplished restaurateurs, having owned several full-service restaurants. We currently own UP UP AND ABOVE Restaurant and Nightclub, Pune. Mr. Rishabh is also an international Restaurant Consultant for top organizations such as the Starwood Group, who own the hotel chains of The Westin, Sheraton Hotels, Four Points, St. Regis, and W Hotels. Mr. Varun has a background in Business Management, and also has completed his Bachelors in Hotel Management. Under the management of Varun, Myth Restaurant was a feature restaurant in Toronto, and distinguished as a top 10 restaurant while under his management from 2003 2005.
Business Model Of TFK’s Product Consistency – By developing a sophisticated supplier networked operation and distribution system, the Food Corner has been able to achieve consistent product taste and quality across geographies.
Act like a retailer and think like a brand – TFK’S focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation.
Start-up Summary
We are currently negotiating a restaurant space of 3,000 sq. ft. in Lucknow U.P, India, and will open TFK’S in October 2011. Our start-up costs are mostly expensed equipment, furniture, painting, reconstruction, rent, startup labor, liquor license, and legal and consulting costs associated with opening our restaurant. At the start of business, Rs.97, 000 will be allocated for business operations reserve. This is a solid start-up forecast based on our market analysis and our knowledge and experience in the industry. We will purchase the following current assets during start-up: • Fixtures and Lighting: Rs.32,250 • Bar Equipment: Rs.56,300 • AC, Sound and Televisions: Rs.183,780 • Office Equipment (2 Computers, Fax, Printer, Safe): Rs.96,000
We have budgeted for the services for a premier Restaurant Consultant familiar with the U.P Market. This is especially key during the site selection and start-up stage. This company will have an integral role in validating the final restaurant location and personnel selection, and participate on the TFK’S Advisory Board. The Four owners are personally committing Rs.5,00,000 of capital.
Start-up Requirements
Start-up Expenses Restaurant Consultant (4 months) Architectural Design Structural & Plumbing Design Mechanical & Electrical Design Graphic Design Electrical & Structural Engineering Fees Design Consultants (Kitchen, Interior & Dining) Engineer & Architect Fees CONSTRUCTION Plumbing HVAC (Air Return, Air Ducts, etc.) Electrical Disposal & Demolition Structural Construction (4 Months General Labour) Facade (Exterior Construction) Plaster (Dry Wall) Mill & Metal Work Interior Finishes (2500 - 3000 sq. ft.) Flooring Fire Alarm System Security & Phone System Stools, Chairs, Tables, Uniforms Glassware, Flatware, Small ware (Bar & Lounge) Glassware, Flatware, Small ware & Supplies (FOH) Kitchen Equipment Freight Fees FF&E Taxes (Taxes on Purchase) Capitalized Legal Fees (LLC, Investor Agreements) Software: Restaurant/Inventory Software: Cost Control Impact, Tap & Permit Fees Business License & Temp Certificate of Occ. Liquor Licenses Utilities, Disposal, Tax & Insurance Security Deposits (Phone/Elec/Gas/Water) Initial Lease Deposits Bank & Loan Closing Costs Web Site Construction Initial Marketing, Training & PR Research & Development Start-Up Salary (Mngt & Chefs) Recruiting (Staff) Inspections Initial Cleaning Services Total Start-up Expenses Start-up Assets
Rs.15,911 Rs.2,195 Rs.1,368 Rs.2,155 Rs.1,185 Rs.2,592 Rs.9,119 Rs.7,040 Rs.5,00,000 Rs.33,244 Rs.19,250 Rs.7,964 Rs.4,122 Rs.52,099 Rs.3,092 Rs.2,061 Rs.8,244 Rs.14,538 Rs.14,622 Rs.3,092 Rs.4,615 Rs.38,025 Rs.3,298 Rs.8,298 Rs.2,389 Rs.7,988 Rs.7,080 Rs.5,500 Rs.6,000 Rs.3,115 Rs.1,615 Rs.4,615 Rs.9,275 Rs.6,250 Rs.6,250 Rs.6,250 Rs.5,800 Rs.19,550 Rs.3,050 Rs.58,050 Rs.14,550 Rs.750 Rs.1,000 Rs.9,27,209
Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets
Rs.97,099 Rs.27,500 Rs.73,311 Rs.6,33,330 Rs.8,31,240
Total Requirements
Rs.17,58,449
Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
Rs.9,27,209 Rs.8,31,240 Rs.17,58,449
Assets Non-cash Assets from Start-up Cash Requirements from Start-up
Rs.10,72791 Rs.2,41,551
Cash Balance on Starting Date Total Assets
Rs.2,41,551 Rs.13,14,342
Capital Planned Investment Mr. Rishabh Kedia Mr. Rohan Srivastava Mr. Tarun Srivastava Mr. Varun Mishra Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Funding
Rs.5,00,000 Rs. 5,00,000 Rs. 5,00,000 Rs. 5,00,000 Rs.20,00,000 (Rs.17,58,449) Rs.2,41,551 Rs.20,00,000
Operations Management
Operations management Restaurant Location Lucknow, U.P is the location selected for the TFK’S concept. The outlook for the future of U.P's Lucknow district is exceptionally positive and the most progressive development area in the city. Developers are infusing over Rs.50 billion in Commercial, Residential, and Retail development. The market has been carefully selected and tested for the necessary demographics and retail traffic necessary to meet the goals laid down for profitability. The busy Lucknow commercial/residential location has been chosen based upon a successful demographic model and a traffic count of more than 33,000 cars daily.
Restaurant Designs Single-Level Design Concept: The total space requirement is 3,000 square feet. The restaurant will feature a comfortable and open concept design. The central dining area will allocate 76 covers, the lounge 22 covers, and the dining bar with 12 covers. In total, the restaurant will provide seating for 110 patrons. Where possible, consideration will be given to incorporate a dining patio. Zoning, parking, and accessibility issues will be reviewed as part of this analysis.
Optional Patio: Keeping in mind the climate of the City, during the busy winter month’s customers can also sit outside on our patio and we will offer a special winter menu, featuring lighter fare, exotic drinks, as well as non-alcoholic offerings. The patio setting will be a fun and casual atmosphere for the winter crowd.
Operating Criteria The restaurant will be located in Lucknow U.P. The restaurant will service lunch, dinner, and after-hours dining during the week and weekends. The restaurant will operate during peak service time to take advantage of street traffic, and after-hour patronage from the entertainment facilities in the area. Service will be available during the following hours: Lunch: Monday to Saturday, 11 a.m. - 3:30 p.m. Dinner: Monday to Saturday, 7:30 p.m. - 11 p.m. Sundays - Market brunch takeout only.
Services TFK’S Restaurant & Lounge will feature international dishes, an eclectic ambiance, and superior service. Our food will be of the finest quality and prepared with exotic flare. Customer satisfaction is the driving force behind our success. We will change our menu every 4 months, but maintain the 'favorites' for loyal patrons. Portions will be modestly sized, garnished with stunning presentation. Our wine list will be modest and primarily focused on wines from California, Spain, Portugal, and Argentina. Approximately 25% will be available exclusively by the glass, and the remaining labels will be available by the bottle. We will also feature a moderate international beer selection on tap and in bottles. The TFK’S bar features a comprehensive selection of local and international spirits. The kitchen staff will have the best in culinary education and work experience. Their creative talents will compliment one another. The lounge and restaurant staff will offer the finest service in an electric atmosphere and offer customers an extraordinary dining experience. TFK’S Menus TFK’S's varied international menu will feature Thai, Chinese, Spanish, and other regional flavors The menu flows together to create complementary elements. Normal dining will have a reduced Tapas, Appetizer and Entrees selection, while the Fusion Dim Sum menu will have special items featured only for after-hours dining. The final menu will be defined by the Executive Chef and paired with the wine menu. We have carefully selected a premium wine, beer, and alcohol listing, from which we will choose a modest rotating selection. TFK’S's marketing will focus on our exotic foods, but our hours, target market, and location will produce significant alcoholic drinks sales. Tapas, in particular, are small dishes meant for sharing while drinking sangria, wine, or other mixed drinks, and the Tapas menu will play up this idea with drink suggestions. The list below offers a small selection of our opening menu offerings:
•
Appetizers • Bread basket served with Olive oil, Black Pepper, Cheese dip • Soups, Finger chips, Bread Pakora, Paneer Pakora, Cutlet, Sandwich
•
Salads • • • •
Mixed Greens with Spanish sherry wine vinaigrette Asian Pear and Endive Salad with Blue Cheese & Walnuts Russian Salad Traditional Indian salad
•
Entrees • Tequila Scallops w/ a Spanish sherry reduction • Thai Red Chili rubbed shrimp • Bloody Mary
•
Desserts •Chocolate Chunk Bread Pudding w/a Bourbon Cherry sauce •TFK’S Chocolate Explosion - Milk, Dark and White chocolate •TFK’S Fruit Plate •TFK’s Special ice cream
Specialty Drinks & Coffees A key source of revenue for the restaurant will be alcohol and bar sales. The restaurant will feature exotic drinks on a separate menu. Alcoholic drink specials will be featured, as well as a large non-alcoholic selection. After-hours bar service will feature selections of non-alcoholic drinks to increase bar sales during lunch and after regulatory hours, Bar pricing is competitive; prices range from Rs.350 to 695. Non-alcoholic drinks will be in the higher price bracket due to preparation requirements. Prices will range from Rs.475 to 950.
Marketing Management
MARKETING STRATEGY OF THE TFK’S DIRECT MARKETING INTERNET MARKETING STRATEGY SMS MARKETING STRATEGY
FIRM CUSTOMERS All Population of lucknow are our customers
Customer Perception and Customer Expectation Customer perception is a key factor affecting a product’s success. Many potentially revolutionary products have failed simply because of their inability to build a healthy perception about themselves in the customers’ minds. TFK’S being an nationally renowned brand brings with it certain expectations for the customers.
Regular spender Occasional customer Night hawks Target Segment A Family with children Early Urbanbirds customer on the move Teenager Round the corners customers
Your most prized customers. What do they typically order and what offer would be most appealing to them? These customers don’t order from you as often as you would like. They might respond if you make them an enticing offer. You may have a group of customers that order from you late at night. Why not make them thatfor canme? be redeemed after Whatanisoffer TFK’S midnight. A treat to children, a fun place to be for the children. These customers might typically order from you soonschedule as they Great taste, quick service without affecting theaswork getHangout back from work. You might want to send them an offer of a with friends, but keep it affordable. discount on all orders before 7 o’clock. local customers have lower delivery costs so you can afford to make fairly aggressive offers to this group.
Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customer’s expect the brand to enhance their self-image. Customer responses obtained at the Patna (Bihar) outlet confirmed the fact that they connect strongly with the brand. However, fulfilling some of the customer expectations like a broader product variety provides TFK’S a great scope for improvement.
Market Analysis Summary Instead of building a business around a preconceived concept, we conducted market research and built a concept around our consumers. Our market analysis identified the following key drivers as areas of opportunity to service U.P's restaurant customers:
1.
Portion Selection: Nearly 95% of our surveyed focus group endorsed having a choice of different size portions. This statistic is in line with findings reported by the Table service Operator Survey. TFK’S's Tapas concept is built to offer different-sized portions. Our customers want the option to choose what satisfies their appetite.
2.
Menu Variety: Ethnic restaurants are increasing in U.P. The proliferation of international cookbooks, food magazines, TV cooking shows and imported goods offers ample evidence that America, as a whole, is currently on an international tasting spree. In fact, eating places that identify themselves as ethnic establishments numbered nearly 78,000 in 1999 and recorded sales of Rs.30.5 billion. Our research results do not identify any single ethnic style of restaurant as desired, but rather suggest that incorporating strong multi-ethnic influences in the menu selection will be popular. Again, variety is the underlying element for this concept.
3.
The Dining Experience: Customer satisfaction with food and service has been and continues to be of utmost importance, but our findings indicate that the decor, lighting, bar, and other options to improve the dining experience are also factors in customer decisions. TFK’S takes all these factors in consideration for the design of this cosmopolitan restaurant
4.
Reasonable Prices: This was no surprise given the economic tide. Although the restaurant industry as a whole has seen growth in 2009/2010, customers are demanding value for their dining money. TFK’S's menu is priced at a mid-tier level, with no entrée over Rs.200. In addition we have an extended Tapas and Appetizer selection priced between Rs.350 Rs.950, allowing budget dining in a full-service restaurant.
Market Segmentation TFK’S's Restaurant & Lounge intends to cater to a wide customer base. We want everyone to feel welcome and entertained.
Demographically :1]Cater to kids 2] youth 3]Urban upper & Middle class families.
Geographically :1]Mainly in lucknow town.
Psychographic:1]Place to chill out with friends and families 2]Place for enjoyment of the kids
We have defined the targeted segments that contribute to our growth projections: 1. 2. 3. 4. 5.
The Business Person Downtown U.P Couples The Destination Customer High-End Singles Tourists
These particular market segments are 25-45 years old, have disposable income, and are seeking upscale, trendy, and comfortable restaurant options. These are the types of people who frequent other restaurants and bars in the area. They are likely to spend more on experiences they perceive as unique, cosmopolitan, and sophisticated. They are also the most open to trying something new, food wise, and will embrace our international fusion cuisine.
Market Analysis 2011 Potential Customers Business Person Downtown U.P Couples Tourists The Destination Customer High-end Singles Total
2012
2013
2014
2015
Growth
CAGR
18%
9,925
10,223
11,348
11,688
12,039
4.95%
32%
17,645
18,527
20,565
21,593
22,673
6.47%
13%
7,168
7,311
7,896
8,054
8,215
3.47%
8%
4,411
4,499
4,724
4,818
4,914
2.74%
29%
15,991
16,950
18,815
19,944
21,141
7.23%
5.76%
55,140
57,510
63,348
66,097
68,982
5.76%
Market Profile (Pie)
Target Market Segment Strategy The Business Person: They work hard all day and often stay overnight in a strange city. They need a competent establishment that helps impress clients and prospects. Afterward, they want to relax and use the money they are making (or is expensed by their company). They spend the most on drinks, food and tips. TFK’S's cosmopolitan flair and comfortable atmosphere will be perfect for sophisticated business people, whether they live in and around U.P or are here for work. Lucknow couples: The restaurant will have an intimate, romantic, enticing adult atmosphere that suggests "date." TFK’S's will be the best date location in town. These young Lucknow couples are generally very successful working professionals. In most cases they are budgeting to eat out on a regular basis, as they don't have the time to prepare food nightly. The Destination Customer: U.P is a very 'sectioned' city, and consumers often look only in their own neighborhoods for restaurant options. TFK’S will break these habits, using marketing to draw customers from outside the main city limits. TFK’S will be a destination restaurant. Our Destination Clients tend to be new suburbanites that miss the excitement of the inner city. They have disposable income, and will spend quite a bit on such outings. TFK’S's will be especially appealing to married suburban couples indulging themselves with a "date night" downtown, away
from the kids. Many of these consumers are new to U.P from larger cities, accustomed to dining within the city and at non-franchised restaurants. High-end Singles: We will attract them with our eclectic atmosphere and layout. Our international menu, striking decor, entertainment and events, excellent service and engaging clientele will confirm the feeling of being in "the in place" in U.P. These are the individuals that pride themselves on socializing and dining at the premier locations.
Tourists: U.P attracts many vacationers during the summer months of May through September. TFK’S's will be a destination dining locale, with its attractive atmosphere, international menu, and lounge. A large percentage of the tourist populations are vacationing singles, here to socialize and be entertained. This is especially true for the tourist population that visits for sporting and social events - they are not interested in family establishments.
Service Business Analysis The restaurant industry is highly competitive and risky. The owners know this through their many years of experience opening, running, and improving restaurants across Northen India. Most new restaurants opened by inexperienced owners struggle or fail. However, those based on solid understandings of the market needs, and management of inventory and staff have a much higher chance of success, especially when combined with prior experience in the restaurant industry. Restaurants make money by taking inexpensive ingredients, combining them in creative ways, cooking them properly, and selling them at a much higher price. Any ingredients wasted in the kitchen are money thrown out. Any time wasted in seating customers, taking orders or preparing food is money walking away. While some entrepreneurs think that success is as simple as a good location and a trendy concept, we know the truth: To succeed in the restaurant industry, you need an understanding of the risks and financial conditions, the ability to handle enormous pressure, and the organizational skills to bring off what is essentially a giant catered party, two to three times a day. Competition and Buying Patterns In 2003, the top ten U.P restaurants shared two things: cozy, hip interiors and reasonably priced, regionally specialized menus. Only one of them offered traditional "southern" cooking. And half of them were located in Lucknow. Our competitors are heading in the right direction, but only TFK’S is based on sound market research in the local market. U.P consumers are seeking variety and new experiences. Location is clearly important, but so is atmosphere and distinctiveness. Our marketing challenge is thus to stand out from our competitors, not only as the "new" restaurant, but as one that offers consistently high quality food, menu variety, and a unique atmosphere. Maintaining our edge will depend partly on marketing ourselves as an adult-only destination, and not a family restaurant.
Strategy and Implementation Summary
Our strategy is simple. We intend to succeed by giving people a combination of excellent and interesting food in an environment that appeals to a wide and varied group of successful adults. We will focus on establishing a strong identity in our community with a grand opening. Our main focus in marketing thereafter will be to increase customer awareness in the surrounding communities. We will direct all of our tactics and programs toward the goal of explaining who we are and what we do. We will keep our standards high and execute the concept flawlessly, so that word-of-mouth will be our main marketing force. We will create an appealing and entertaining environment with unbeatable quality at an exceptional price. As an exciting and eclectic restaurant, we will be the talk of the town. Therefore, the execution of our concept is the most critical element of our plan. All menu items are moderately priced for the area. While we are not striving to be the lowestpriced restaurant, we are aiming to offer exceptional food at reasonable prices for the average restaurant diner. Competitive Edge TFK’S's competitive edges are: 1. 2. 3. 4. 5. 6. 7. 8.
The owners' thorough understandings of opening and running a restaurant An extraordinary contemporary restaurant design International menu with featured menu changes every 4 months Unique, 3-Tiered spatial layout Chef Co-op program to allow new entrants, trainee and featured chef Chef/Management Stock Incentive Program. Inner and Outer City Marketing campaign (i.e. "Come to Town" promotions) Employee Training, Incentive and Retention program
Competitor Analysis Below are excerpts from our competitive analysis study. 1. The MotiMahal (Direct Competitor): We were able to draw some conclusions from this analysis that helped defined the concept and positioning for TFK’S: 1) Keep the menu pricing modest but offer superior food quality and presentation. We plan to keep the menu prices under Rs.300) Lucknow is a prime restaurant location. One Lucknow Kitchen is in an obscure location but has thrived as one of the more successful restaurants in the area; and 3) The customer base in this segment of U.P is ready for after-hours dining, and is willing to travel to establishments that accommodate their needs. 2. Gemini Continental (Direct Competitor): This restaurant is a main competitor for TFK’S, a casual dining restaurant that has evolved to be a great success story for the Lucknow district. This restaurant served to validate 1) the tapas concept appeal for Lucknow customers; 2) the evolving need for after-hours dining; 3) tapas as a good food concept for after-hours dining (smaller portions, smaller price); 4) the appeal of live Entertainment.
3. Aryans (Indirect Competitor) This restaurant has grown in popularity over the years, and has gained popularity as a destination restaurant that can cater to business professionals as well as the local residents. The menu is somewhat formal for this market segment, but the bar attracts a good crowd. During this study it was evident that some patrons came exclusively to sit at the bar, without any intent of dining in the restaurant. Aryans is more of a formal dining restaurant and meets a certain need within the community, but I don't see it as a direct competitor of TFK’S. I do feel that it has some very special elements that have helped it succeed over the past 3 years, which TFK’S can benefit from.
Failed Restaurant Analysis: AM-PM AM-PM was an U.P restaurant attraction in the downtown core, a strong competitor that was severely impacted by the patronage demise after sometime of opening. I also completed an analysis of this restaurant back in 2004 and compared it to this current analysis in 2008. Several factors led to closing of this restaurant: Location: This was a very cosmopolitan restaurant located in a core business community. The restaurant was hidden in cross streets and away from the general street traffic. This was a destination restaurant and a secondary selection for the general customer base in this area. Lesson Learned: As part of this analysis, we have determined that the downtown core is not a good fit for the TFK’S concept. We will limit our site selection to the core Lucknow district and the upper Downtown district. Lucknow is U.P's major growth district and is developing the residential infrastructure in pace with the business infrastructure. Customer Segment: U.P's downtown core is not ready for this type of restaurant. U.P's downtown core is a business district, and residential development for this area is at the Genesis state. The primary customer base is the business person and tourist. The largest percentage of this customer segment will be looking for a restaurant in which to conduct business or a family establishment; AM-PM would not be a primary selection in either case. Lesson Learned: TFK’S's target market demographics are perfectly in alignment with the Lucknow profile. Lucknow has a business core as well as a residential core. We will look to the business core for our primary daytime business, but to our residential core for our dinner and after-hours patronage. In addition, the business core will look to TFK’S as a place of socialization for dinner and after-hours unwinding. AM-PM depended on the business segment for their lunch and dinner profits, and customers who would travel from outside the downtown district to eat at the restaurant - there was no static dinner segment. Visibility: Hand-in-hand with location, this restaurant also suffered from poor visibility. In the downtown core a large percentage of business is from walk-in traffic. The business and tourist customers tend to select a restaurant from touring the area and accessibility. AM-PM was situated on a cross street behind the main street.
Lesson Learned: Although being situated on a main street is not as key in the Lucknow district, we will ensure that visibility is part of our site selection criteria. In addition, we will use signage and exterior decor as means to attract customers and get noticed. In all, this restaurant was a staple in U.P's downtown core for over 10 years, but key restaurant disciplines (Location, Customer Segment, Visibility) came back to hurt them as the economic climate changed.
Market Analysis Conclusion: At the end of the day, everyone that sells prepared meals in this district is a TFK’S competitor, because we all compete for the same home meal replacement dollar. However, there are two segments of the restaurant industry that are our main competition: the casual dining restaurant and the fine dining value restaurant. So, if the food and service is better at a fine dining restaurant than a casual restaurant, but price has become a factor as a result of the economic turns, where is a customer more likely to go? There is no absolute answer to the question, but the solution is to deliver the best food at the best price with the highest level of service in one establishment. This is the very definition of value and the concept at the heart of TFK’S's business model.
Marketing Strategy TFK’S Restaurant & Lounge's Marketing strategy will be to promote our electric food, superior service, and exciting concepts to draw in the local repeat customers. Marketing initiatives will concentrate on the following: Building and Signage: The most important Marketing tool that we have is the exterior of our building, and our new sign. We budgeted a great deal into the renovations and decor to generate the aesthetic appeal of TFK’S. See attached Logo and Web design. Customer Service: In our years within the restaurant industry, customer service has always been the major draw for the dining clientele. Food and atmosphere is far out-shadowed by superior customer service that turns a new customer into a repeat customer. Management will demand the wait-staff provide the very best in quality services to the customer, making certain that they are content and satisfied with their dining experience. Wait-staff are thoroughly trained, and every 90 days they undergo a performance appraisal. This is part of our Employee Manual, and Operations Manual guide.
Advertising and Promotion: Our Advertising Plan and media schedule call for targeting customers directly through local publications aimed at , respectively, singles, couples, and destination customers. Management recognizes the key to success at this time of initial opening is extensive media promotion. This must be done aggressively in order to accomplish our service goals. A healthy budget is allocated for the first year. A primary part of the budget is allocated to create the media and customer buzz for the month prior to opening and the next three months after the grand opening. The full Marketing program is as follows:.
Media Objectives and Strategy: Establish our image as a unique Lucknow restaurant with great service, value, and great food served in an eclectic atmosphere. We will maximize efficiency in the selection and scheduling of advertisements by: • • • Selecting primary business publications with high specific market penetration, using The Creative Loafing Dining Section, The U.P Journal Constitution, U.P City Search, and Social Diva, which all reach our targeted demographics. • Scheduling adequate frequency of ads to impact market with menu items and promotions. • Where possible, positioning advertisements in or near entertainment/food related editorial. • Redirecting customers to our website to register for upcoming functions, VIP lists, reservations, and flash media promotions. • Maximizing ad life with monthly and weekly publications. Working with The Reynolds Group Media Co. (TFK’S Advisory Board), we will develop an advertising campaign built around our TFK’S Diner theme, menu offering, location, and decor. We will support this plan with ads that reinforce the TFK’S dining concept. Additionally, we will develop a consistent reach and frequency throughout the year, targeting each specific customer segment within a five-mile radius, and new 'suburbanites,' who still appreciate in-town dining.
Promotional Campaign: The best way to reach our potential customers is to develop an intense advertising campaign promoting our TFK’S concept of "Spice of Life." In addition to standard advertising practices, we will gain considerable recognition through newspapers, newsletters and public announcements. Consumers will be encouraged to visit our website to be greeted with a flash media intro that highlights the restaurant, past happenings, upcoming attractions and our dynamic menu. Our periodic customer surveys and weekly menu item sales evaluations will help us to understand what advertising is working and what is not; basically, who we are reaching. Our goal
is to understand our customer, measure the success of our direct marketing and media activities, and redirect advertising as effectively as possible.
Publicity Strategy: Working with The Reynolds Group, TFK’S will focus on the following publicity strategies:
•
• •
Develop a sustained public relations effort, with ongoing contact between key editors and toplevel personnel at local dining publications. Develop a regular and consistent package update program for the major target media, keeping key editors abreast of all new promotions, and menu introductions. Establish contact with editorial staff for the purpose of being included in entertainment "roundups"--product comparisons in dining publications and the local papers. Produce a complete TFK’S Restaurant history and menu offering piece to be used as the primary public relations tool for all target media editorial contact. This will also be effective for inclusion in press kits.
Press Release/Grand Opening: TFK’S Restaurant will release a series of press releases on the Grand opening. Editorial Visitation: Leading up to the Grand Opening, and over the first 6 months of operations, we will invite the most influential reporters and editors from all local publications to TFK’S Restaurant in order to evaluate our menu, service, and atmosphere. Publicity Revenues: We anticipate at least 10% of our annual sales will be generated directly from our publicity. A full media kit will be sent to all local publications, and releases on new menu items will be made monthly. Community: TFK’S will look for key opportunities to pair with local community development organizations and radio stations to interface with our customers We will continually look for local community programs in which we can participate, in order to better our community, and give something back.
Marketing Program In line with our Marketing strategy, we will employ three different marketing tactics to increase customer awareness of TFK’S: In-Restaurant Marketing, Public Relations Marketing, and Media Marketing. Our most important tactic will be word-of-mouth/in-restaurant marketing. This will be by far the cheapest and most effective of our marketing programs.
Word-of-mouth/In-Restaurant Marketing • Restaurant Night: Every first Monday of the quarter, we will have a special evening for restaurant people. A perfect night for the local area's restaurant owners, chefs and staff to
get together to discuss the market and food trends, and possible Co-op efforts to promote the Lucknow district. This is not a conflict of interest, it is an effort to increase visibility and patronage across the Lucknow district. We will also invite the Lucknow Alliance committee for their participation. • • Monthly Dating Connection: With the increasing appeal of Internet and speed dating, the restaurant will offer a monthly dating night. In addition to food and beverages, customers can choose from an array of dating packages up for auction. • • Wait Area Marketing: Wait staff will service appetizers to customers waiting to be seated or on the wait list.
• • • • •
• •
Live Entertainment parties Special Events Valentine's Day TFK’S Holi party Wine tasting weekend TFK’s Diwali Fiesta New Year's Eve party
Public Relations Marketing • India Hospitality & Tourism V.I.P. Party: We will host a V.I.P. Dinner before the 'Grand Opening.' This will serve the dual purpose of training our staff and introducing ourselves to the community. The list of individuals we will invite comes from the Chamber of Commerce, India Hospitality & Tourism, and Lucknow Development group. We want their full commitment to the restaurant. • • Critics' Choice: Prior to the Grand Opening there will be two preliminary parties catering to the Media and Critics community. We will encourage the media and restaurant critics to meet at the restaurant and review the decor, service and food. This will be a preliminary review, where we will consider constructive input to make minor revisions prior to the true Grand Opening. This initial review and input will give critics and media commenter’s a stake in TFK’S's success, through their contributions to the final design. • • Brochures: Make a brochure for the in-town hotels and business establishments to provide to their guests and staff, containing interior pictures of our restaurant, menus and prices. • • Government Relations: There are several Government offices in the Lucknow/Downtown area. We will approach them to cater business luncheons and private functions. This will offer us higher visibility for future functions and community events. Wordof-mouth referral is very powerful and particularly amongst the business community. •
• Private Functions: Target marketing to businesses for regular business lunch and dinner entertaining, and private functions.
Media Marketing •
• • • •
• • •
Newspaper campaign: A very targeted media campaign to obtain featured articles about the restaurant in their Living, Entertainment and Dining segments. Notices of all live entertainment segments and special features will be posted to local newspapers' calendar announcements. Restaurant and Special Events Website: We have contracted with local design teams to deliver a high-quality, navigable, constantly updated website. Media Relations: Several media relations teams will be utilized to market the Restaurant. Social Diva and Green Frog are two media companies we will utilize for media relations. Both companies have an insightful presence and connection with our target market. Billboard Advertisement: One month prior to the opening, distinct billboard ads will advertise the launch of the Restaurant. Inner & Outer City Marketing: We will budget to attract customers from the suburbs.
Sales Strategy Our strategy is simple: we intend to succeed by giving our customers a combination of delicious and interesting food in an appealing environment, with excellent customer service, whether on their first visit or their hundredth. Our marketing strategies are designed to get critics and initial customers into our doors. Our sales strategies must take the next step and encourage customers to become repeat customers, and to tell all their friends and acquaintances about the great experiences they just had at TFK’S. New restaurants often make one of two mistakes: they are unprepared or under prepared for opening, and initial poor service, speed, or quality discourages customers from returning, or they spend all of their efforts at opening, and are unable to maintain the initial quality customers expect on return visits, decreasing word of mouth advertising and leading to poor revenues.
TFK’S's sales strategy requires consistently high quality food, service, speed, and atmosphere. We can accomplish this by: • Hiring employees who genuinely enjoy their jobs and appreciate TFK’S's unique offerings • Continually assessing the quality of all aspects mentioned above, and immediately addressing any problems ,Interacting with our customers personally, so they know that their feedback goes directly to the owners ,Evaluating food choices for popularity, and keeping favorites on the menu as we rotate seasonal foods and specials
Sales Forecast The following sales graph is based on first year start-up estimates only. We anticipate that the business will not be at full operating capacity until the sixth month of operations. This is due to the competitive nature of the market and existing customer loyalty. All factors governing our sales progress are outlined below in the Important Assumptions section. Our sales forecasts for years 3 through 5 are very conservative, compared to industry standard growth rates. Although we hope to do catering for local businesses and government offices with time, we will insist on payment at delivery - we will not sell on credit.
Web Plan Summary (www.tfk’s.in) TFK’S Restaurant & Lounge will have a dedicated website. It will be the virtual business card and portfolio for the company, simple, contemporary and well designed. Our site will offer our menus, prices, reviews and happenings at TFK’S. We will also have a monthly Paparazzi Review about what did happen at TFK’S to get new customers interested in our restaurant. Our website will be used to try out new offers, starting with an on-line order feature for the Sunday Market Brunch, and expanding if the concept gains favor with our customers. A customer will be able to order a selection for pickup using a credit card. Selections will be based on our pre-
packaged meals available during the Sunday Market Brunch. This is also a potential for customers needing catering. The website will include email capabilities and online reservations and special events scheduling.
Management Summary The strength of our management staff positions us for success. We have assembled a team that embraces different disciplines, accomplished professionals with expertise in all areas of the business, including marketing and restaurant management. The owners, Mr. Varun Mishra, Mr. Rishabh Kedia, Mr. Tarun Srivastava, and Mr. Rohan Srivastava , have considerable experience in the restaurant industry. In Year 2, we will hire a General Manager to handle the day-to-day Restaurant management. This will assist TFK’S's Restaurant & Lounge to grow even further. You can't build investor confidence based on what you will do, but you can inspire confidence based on what you have done. These TFK’S Management teams has deep roots in the restaurant segment, and have the practical experience to make this venture another great success. Management Team
TFK’S Restaurant & Lounge understands the importance of a strong management team. The strength of our management staff positions us for success. Day to day operational management will be conducted by Mr.Varun, as hands on manager.
TFK’s Ownership & Management Varun Mishra- Managing partner (Operations Management) Mr. Varun has a background in Corporate Business Management and Business Start-ups, and is certified in Restaurant and Hotel Management. As co-owner, Varun Mishra is responsible for overall direction and operational management. He is a strong business leader responsible for
strategic planning and continued growth of restaurant services and business development. Also, he is responsible for the concept and the daily operations management, with yearly sales targets of Rs.7 million.
Degrees, Certifications, and Professional Affiliations: • • • • • •
MBA in Corporate Business Management B.S. in Computer Science Certified in Restaurant & Hotel Management from Lucknow University PMP (Project Management Professional) certification Member of the Lucknow Alliance Business partner member of the National Restaurant Association.
• •
Rohan Srivastava- Managing Partner (marketing management)
Mr. Rohan is a highly accomplished Marketer he specializes in the field with tons of personal and professional experience in his 5 year old but illustrious career in marketing. He is also a former partner and owner of Madhuban restaurant. He is responsible for all the marketing activities of the restaurant and so far many innovative plans, suggested by him have been implemented, and the restaurant has become the talk of the town even before its launch. Degrees, Certifications, and Professional Affiliations: MBA in Corporate Business Management B Sc in Computer Science and Statistics Member of the restaurant Association
Rishabh Kedia : Managing Partner (Financial management) He will manage all the Financial and investment functions of the TFK’s. Mr. Rishabh is an accomplished restaurateur, having owned several full-service restaurants. His contracting responsibilities include site and lease negotiations, start up and financial fore cast, we are aware that successful ventures in the restaurant industry must balance capitalizing on new trends with continual quality assessment. Kedia's understanding of day-to-day cash flow planning and staff management will be critical to TFK’S's financial success.
Degrees, Certifications, and Professional Affiliations: MBA in Corporate Management B Sc in Computer Science and Statistics Member of the restaurant Association Diploma in accountancy techniques
Tarun Srivastava : Managing Partner
(Human Resource Management) Tarun is responsible for looking after the Human Element of the TFK’s as it’s the soul of restaurant business. He is responsible to look after the HR related issues and about the performance evaluation of the staff, hiring and firing would also be controlled by him Degrees, Certifications, and Professional Affiliations
MBA in Corporate Management B Com in Economics Member of restaurant association of India
Managing Partner Responsibilities In addition to the management of day to day operations, both managers, as principals within the company, will oversee menu development, purchasing, portioning, pricing and inventory control, including approval of all financial obligations of the company. They will plan, develop, and establish customer service policies and objectives, and write, explain, and enforce an employee's manual for all employee-related policies.
Responsibilities for hiring and firing employees lie solely with the two operations managers, and any decisions in these areas will be made jointly. They will: • • • •
Manage working capital, including receivables, inventory, cash and marketable securities. Perform financial forecasting, including capital budgeting, cash flow analysis, pro forma financial statements, and external financing requirements. Prepare financial analyses of operations for guiding management, including reports which outline the company's income, expenses, and earnings. Direct preparation of budgets and financial forecasts and arrange for audits of company's accounts.
Human Resou rce
Management
Human resource management The restaurant business requires exceptional Human Relation Skills to deal with the everyday customer and to provide them with the exquisite service of high quality so as to lift their spirits. We would hire a specialized work force to achieve the optimum levels in the services we provide. There would be adequate staff to look after the customers and provide them with the best service in the region, and to pamper their senses and taste buds so that we are able to build a loyal customer base who would also spread our name by word of mouth and provide with the best form of advertisement and customer base. We would also keep in mind that our staff is well taken care of and their problems are sorted out in the initial stages and no grievances exist that may affect their performance and working capacity.
Personnel Plan
We believe the personnel plan is in good proportion to the size of the restaurant and projected revenues. The staff will include 13 full-time employees and 8 part-time employees, who will work a total of 754 man hours per week and generate an average monthly gross payroll of Rs.27,308 for the first year in business. The estimated gross annual payroll of Rs.399,588 (including Partner Salaries) is 37% of total sales. Wage salaries for service personnel (wait staff, waitresses, bouncers and bartenders) do not include anticipated tips. With average tipping rates for the U.P, India area, and our menu prices, service employees should average at least twice the minimum wage in any given shift. Skilled waitresses and bartenders on weekends and evenings will make substantially more. Kitchen: The Executive Chef will be assisted by:
• • • • •
An Assistant Chef from a national search (1). A Sou chef with considerable experience in different restaurants (1). Cooks that work directly with Peter or the sous chef (2). Prep cooks/dishwasher (2). People cleaning the restaurant (2).
Administrative Salaries (Partners): 10 % profit to be shared by each of the four partners
Personnel Personnel Plan General Manager (Year 2+) Partner/Manager Partner/Asst. Manager/Exec. Chef Hostess (Full Time) Hostess (Part Time) Waitperson 1 Waitperson 2 Waitperson 3 Waitperson 4 Waitperson 5 Waitperson 6 Waitperson 7 Waitperson 8 Waitperson 9 Wait/Barperson Bartender 1 Bartender 2 Busboy 1 Busboy 2 Busboy 3 Assistant Chef Sous Chef Cook 1 Cook 2 Prep Cook/Dishwasher Prep Cook/Dishwasher/Cleaning Dishwasher 1 Dishwasher 2 Cleaning/Dishwasher Open Total People Total Payroll
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
Rs.0
Rs.0
Rs.28,000
Rs.28,500
Rs.29,000
Rs.48,000
Rs.48,000
Rs.48,000
Rs.48,000
Rs.48,000
Rs.32,160
Rs.32,160
Rs.32,160
Rs.32,160
Rs.32,160
Rs.24,000 Rs.13,200 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.10,440 Rs.14,400 Rs.7,200 Rs.9,120 Rs.11,760 Rs.7,200 Rs.44,400 Rs.32,400 Rs.24,240 Rs.18,960 Rs.12,288
Rs.24,500 Rs.13,500 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.10,440 Rs.14,400 Rs.7,500 Rs.9,120 Rs.11,760 Rs.7,200 Rs.44,400 Rs.32,400 Rs.24,240 Rs.18,960 Rs.12,288
Rs.25,000 Rs.14,000 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.10,440 Rs.14,400 Rs.7,500 Rs.9,120 Rs.11,760 Rs.7,200 Rs.44,400 Rs.32,400 Rs.24,240 Rs.18,960 Rs.12,288
Rs.25,500 Rs.14,300 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.10,440 Rs.14,400 Rs.7,500 Rs.9,120 Rs.11,760 Rs.7,200 Rs.44,400 Rs.32,400 Rs.24,240 Rs.18,960 Rs.12,288
Rs.26,000 Rs.14,800 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.5,640 Rs.10,440 Rs.14,400 Rs.7,600 Rs.9,120 Rs.11,760 Rs.7,200 Rs.44,400 Rs.32,400 Rs.24,240 Rs.18,960 Rs.12,288
Rs.12,960
Rs.12,960
Rs.12,960
Rs.12,960
Rs.12,960
Rs.8,640 Rs.5,700 Rs.11,760 Rs.0 20
Rs.8,640 Rs.5,800 Rs.11,760 Rs.0 24
Rs.8,640 Rs.5,800 Rs.11,800 Rs.0 25
Rs.8,640 Rs.5,800 Rs.11,800 Rs.0 25
Rs.8,640 Rs.5,800 Rs.11,800 Rs.0 25
Rs.399,588
Rs.400,788
Rs.429,828
Rs.431,128
Rs.432,728
Financial Ma nagent
Financial Plan TFK’S Restaurant & Lounge financial model is based on a business concept to "Plan for the Worst, but Manage for the Best." We have approached the financial plan as follows: The First Year projections anticipates a below average sales volume, below average seat turn, and above average food/beverage cost. This position will help us ensure sufficient financial planning to accommodate a reasonable ramp-up period, and business success, also ensuring that we do not enter this venture under-capitalized. Financial Pro Forma TFK’S is investmenting Rs.20,00,000 for renovations, furniture, kitchen equipment, liquor license, food & restaurant supplies, legal fees, working capital, marketing and personnel. The Financial Plan includes: • • • • • • • •
Important Assumptions: Risk Analysis & Mitigation Plan Sales Forecast Break Even Analysis Profit and Loss Statement Cash Flow Statement Balance Sheet
Risk Analysis/Mitigation 1. How do we allow an adequate startup period and capital to launch the concept and grow our customer base in a competitive sector? Our financial plan is budgeted to support the Worst-Case business scenario. We addressed the financial risk as follows: • We looked at our monthly break-even. • We calculated worst-case monthly financial shortfall based on the ramp-up sales percentages outlined in our financial assumptions. • We budgeted operational shortfall in an operational contingency budget that we will utilize if the need arises. 2. How do we ensure we have addressed all resource gaps, and have the right industry knowledge?
The Financial Plan incorporates a budget for an U.P Restaurant Consulting group. Their services are budgeted for the business start-up analysis, rollout, and on retainer for 4 months of business operations. The selected firm has experience with over 72 Restaurant launches, specializing in the U.P Market. We will be recruiting a seasoned chef (national search) whose style is in accord with the Restaurant concept and our market segment. We will be offering an equity interest to our select Chef to maintain the industry knowledge. Our Accounting service will be contracted to a firm specializing in Restaurant accounting. 3. The current Economic slowdown and recovery state was a key consideration in our restaurant concept. How do we manage a successful restaurant in current market conditions? Our original effort was to open a restaurant twice the proposed size. As we are in the midst of an economic recovery, we have scaled back the size to reduce business overhead, startup requirements, and business operating capital. Another mitigation has been our overall Restaurant concept. We have the menu priced at a midtier level with no entrée over Rs.20. In addition, we have an extended Tapas and Appetizer selection priced between Rs.3.50 - Rs.9.50, allowing budget dining in a distinguished restaurant. 4. How do we confirm that our Funding Requirement is sufficient? Rishabh Kedia has an extensive background in restaurant startup. He is currently an International Consultant for various restaurant ventures, and we will use his expertise in past projects as a comparative basis. We have leveraged our membership with the National Restaurant Association to look at industry averages for this market segment for Restaurant startup and Operations. Additionally, we included a contingency buffer in the financial estimates to account for any potential cost variance. We have worked with our Restaurant Consulting firm to validate our cost estimates to their industry knowledge. 5. How do we know we have selected the right location for this concept? Again we will draw on the Consulting group that has the expertise in site selection and lease negotiation. In all, there are no guarantees with location, but we took a very objective approach with our concept. Instead of going in with a predefined business concept, we let the Market Analysis define the need. Based on the results, the TFK’S Restaurant concept was formed specific to Lucknow U.P. Site selection was based on space, visibility, and functionality; the city grant award confirmed our decision. 6. What if there is an additional need for Business Capital after the Restaurant has exhausted its 6-month buffer? Our intent is to be a self-sufficient business far in advance of the 6-month probation period. But as we are considering all contingencies, we have looked at this risk. We have accounted for an operational contingency budget that will be used to supplement any slow periods. Our next step would be to approach our private investors for capital by extending their return on investment. We would also look to the partners' capital reserves as another source of funds.
Break-even Analysis For our First Year Break-Even Analysis, we have an average running fixed costs of Rs.60,230 per month which includes our full payroll, rent, and utilities, and an estimation of other running costs. With direct cost of goods (inventory, in this plan) at 35% of sales, our monthly break-even point is Rs.92,081. We will surpass our break-even point in October of our first year. As we exit the start-up phase of the business and focus on cost control, we will drive the Cost of Goods Sold (COGS) down, dropping our break-even value, and increasing our Gross Margin. Break-even Analysis Break-even Analysis Monthly Revenue Break-even
Rs.92,081
Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost
35% Rs.60,230
Profit and Loss Statement
The most important assumption in the Projected Profit and Loss statement is the gross margin. We show an adjustment increase in Year 2 as we exit our start-up phase of the business and move into our expected annual sales forecast. This transition shows the restaurant managing through its start-up period, and gaining efficiency and customer loyalty. In summary, the restaurant will develop its customer base and reputation and the growth will pick up more rapidly towards the second and third years of business. Monthby-month assumptions for Profit and Loss are included in the appendices. Profit and Loss Pro Forma Profit and Loss FY 2011
FY 2012
FY 2013
Rs.1,211,088
Rs.1,279,204
Rs.1,341,260
Rs.398,407
Rs.406,976
Rs.415,276
Rs.0
Rs.0
Rs.0
------------
------------
------------
Total Cost of Sales
Rs.398,407
Rs.406,976
Rs.415,276
Gross Margin
Rs.812,681
Rs.872,228
Rs.925,984
67.10%
68.19%
69.04%
Sales Direct Cost of Sales Other
Gross Margin %
Expenses Payroll
Rs.400,788
Rs.429,828
Rs.431,128
Rs.22,000
Rs.25,000
Rs.15,000
Rs.6,500
Rs.6,500
Rs.6,500
Rs.12,000
Rs.12,000
Rs.12,000
Accounting/Payroll Processing
Rs.6,600
Rs.6,600
Rs.6,600
Legal Retainer Fees
Rs.2,400
Rs.2,400
Rs.2,400
Business Licenses & Permits
Rs.6,000
Rs.6,000
Rs.6,000
Marketing/Promotion Depreciation Leased Equipment
Credit Card Expense
Rs.19,983
Rs.21,107
Rs.22,131
Bank Fees
Rs.1,200
Rs.1,200
Rs.1,200
Music & Entertainment
Rs.3,744
Rs.3,744
Rs.3,744
Training / Employee Retention Programs
Rs.5,008
Rs.6,008
Rs.6,008
Repairs & Maintenance
Rs.9,000
Rs.9,000
Rs.9,000
Rs.26,496
Rs.27,821
Rs.28,933
Utility Services (Gas/Electric/Water/Sewer) Telephone/Communication Expense
Rs.1,800
Rs.1,800
Rs.1,800
Insurance: Fire/Theft/Liability/Liquor/Product
Rs.21,624
Rs.22,705
Rs.23,613
Restaurant Occupancy Cost (Lease)
Rs.77,250
Rs.79,568
Rs.81,955
Payroll Taxes (FICA/FUTA/SUTA) & Employee Benefits
Rs.66,531
Rs.71,351
Rs.71,567
Rs.4,800
Rs.4,800
Rs.4,800
Rs.12,466
Rs.13,089
Rs.13,612
Rs.9,500
Rs.9,500
Rs.9,500
Rs.3,640
Rs.3,640
Rs.3,640
Rs.2,400
Rs.2,400
Rs.2,400
Rs.22,850
Rs.23,125
Rs.23,125
Owner Comps
Rs.2,124
Rs.2,124
Rs.2,124
Other Expenses (ComAreaMaint, etc.)
Rs.4,200
Rs.4,200
Rs.4,200
------------
------------
------------
Rs.750,903
Rs.795,509
Rs.792,981
Profit Before Interest and Taxes
Rs.61,778
Rs.76,718
Rs.133,004
EBITDA
Rs.68,278
Rs.83,218
Rs.139,504
Interest Expense
Rs.15,984
Rs.12,640
Rs.9,296
Taxes Incurred
Rs.13,738
Rs.19,224
Rs.37,112
Net Profit
Rs.32,056
Rs.44,855
Rs.86,595
2.65%
3.51%
6.46%
Exterminator/Trash Removal Dishware/Uniforms/Cleaning Supplies/Décor Printing/Paper/Postage/Subscription s Facility (Exterior Cleaning/Grease Trap/Hood/Windows,etc.) R&D Meals General Business Comps
Total Operating Expenses
Net Profit/Sales
Cash Flow Statement The cash flow depends on assumptions for inventory turnover and payment days. We have no sales on credit, so our cash flow does not track accounts receivable. Our projected same-day collection is critical, and is reasonable and customary in the restaurant industry. We do not expect to need any additional financial support, even when we reach the less profitable months, as the downturns are incorporated into the monthly revenue variance figures. Month-by-month assumptions for projected cash flow are included in the appendices.
Cash Flow
FY 2011
FY 2012
FY 2013
FY 2014
Rs.1,073,769
Rs.1,211,088
Rs.1,279,204
Rs.1,341,260
Rs.1,073,769
Rs.1,211,088
Rs.1,279,204
Rs.1,341,260
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.1,073,769
Rs.1,211,088
Rs.1,279,204
Rs.1,341,260
FY 2011
FY 2012
FY 2013
FY 2014
Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Longterm Assets New Investment Received Subtotal Cash Received Expenditures
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Longterm Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance
Rs.399,588
Rs.400,788
Rs.429,828
Rs.431,128
Rs.656,323
Rs.772,134
Rs.796,888
Rs.817,391
Rs.1,055,911
Rs.1,172,922
Rs.1,226,716
Rs.1,248,519
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.47,772
Rs.47,772
Rs.47,772
Rs.47,772
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.20,000
Rs.10,000
Rs.10,000
Rs.1,103,683
Rs.1,240,694
Rs.1,284,488
Rs.1,306,291
(Rs.29,914)
(Rs.29,606)
(Rs.5,285)
Rs.34,968
Rs.117,067
Rs.87,461
Rs.82,176
Rs.117,144
Balance Sheet Statement The projected Balance Sheet is quite solid. We do not anticipate difficulty meeting our debt obligations based on achieving the specific goals outlined in this plan. On a linear projection, TFK’S Restaurant & Lounge has a positive Net Worth beginning in Year 3.
Balance Sheet Pro Forma Balance Sheet FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
Assets Current Assets Cash
Rs.117,067
Rs.87,461
Rs.82,176
Rs.117,144
Rs.184,255
Inventory
Rs.37,839
Rs.40,589
Rs.41,462
Rs.43,473
Rs.45,594
Other Current Assets
Rs.73,311
Rs.73,311
Rs.73,311
Rs.73,311
Rs.73,311
Total Current Assets
Rs.228,217
Rs.201,361
Rs.196,949
Rs.233,929
Rs.303,160
Rs.65,000
Rs.65,000
Rs.65,000
Rs.65,000
Rs.65,000
Rs.6,500
Rs.13,000
Rs.19,500
Rs.26,000
Rs.32,500
Rs.58,500
Rs.52,000
Rs.45,500
Rs.39,000
Rs.32,500
Rs.286,717
Rs.253,361
Rs.242,449
Rs.272,929
Rs.335,660
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
Accounts Payable
Rs.61,298
Rs.63,657
Rs.65,663
Rs.67,319
Rs.69,559
Current Borrowing
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Other Current Liabilities
Rs.0
Rs.0
Rs.0
Rs.0
Rs.0
Rs.61,298
Rs.63,657
Rs.65,663
Rs.67,319
Rs.69,559
Long-term Liabilities
Rs.252,228
Rs.204,456
Rs.156,684
Rs.108,912
Rs.61,140
Total Liabilities
Rs.313,526
Rs.268,113
Rs.222,347
Rs.176,231
Rs.130,699
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities
Subtotal Current Liabilities
Paid-in Capital Retained Earnings
Rs.440,000
Rs.440,000
Rs.440,000
Rs.440,000
Rs.440,000
(Rs.427,209)
(Rs.486,808)
(Rs.464,752)
(Rs.429,897)
(Rs.358,302)
Earnings
(Rs.39,600)
Rs.32,056
Rs.44,855
Rs.86,595
Rs.123,263
Total Capital
(Rs.26,808)
(Rs.14,752)
Rs.20,103
Rs.96,698
Rs.204,961
Total Liabilities and Capital
Rs.286,717
Rs.253,361
Rs.242,449
Rs.272,929
Rs.335,660
Net Worth
(Rs.26,808)
(Rs.14,752)
Rs.20,103
Rs.96,698
Rs.204,961
Business Ratios Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5812, Ethnic Food Restaurants, are shown for comparison. The following table outlines some of the more important ratios from the Ethnic Food Restaurants industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5812.01. Ratios Ratio Analysis Sales Growth Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick
FY 2011 0.00%
FY 2012 12.79%
FY 2013 5.62%
FY 2014 4.85%
Industry Profile 6.96%
13.20%
16.02%
17.10%
15.93%
3.90%
25.57%
28.94%
30.24%
26.86%
28.39%
79.60%
79.48%
81.23%
85.71%
37.68%
20.40%
20.52%
18.77%
14.29%
62.32%
100.00%
100.00%
100.00%
100.00%
100.00%
21.38%
25.13%
27.08%
24.67%
19.17%
87.97%
80.70%
64.63%
39.90%
29.21%
109.35% -9.35%
105.82% -5.82%
91.71% 8.29%
64.57% 35.43%
48.38% 51.62%
100.00% 65.41%
100.00% 67.10%
100.00% 68.19%
100.00% 69.04%
100.00% 59.31%
62.09%
59.39%
59.95%
58.34%
39.09%
1.74%
2.07%
2.00%
0.00%
2.75%
-1.90%
5.10%
6.00%
9.92%
1.59%
3.72 3.11
3.16 2.53
3.00 2.37
3.47 2.83
1.26 0.87
Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
109.35%
105.82%
91.71%
64.57%
3.27%
147.71%
-310.42%
318.76%
127.93%
54.38%
-13.81%
18.07%
26.43%
45.33%
7.17%
FY 2011 -3.69% 0.00%
FY 2012 2.65% 0.00%
FY 2013 3.51% 223.13%
FY 2014 6.46% 89.55%
n.a n.a
10.91
10.16
9.92
9.78
n.a
11.71
12.17
12.17
12.17
n.a
27
29
30
30
n.a
3.75
4.78
5.28
4.91
n.a
0.00
0.00
11.06
1.82
n.a
0.20
0.24
0.30
0.38
n.a
Rs.166,919
Rs.137,704
Rs.131,286
Rs.166,610
n.a
-1.06
3.87
6.07
14.31
n.a
0.27
0.21
0.19
0.20
n.a
21%
25%
27%
25%
n.a
3.11 0.00 0.00
2.53 0.00 0.62
2.37 63.63 0.22
2.83 13.87 0.12
n.a n.a n.a
Expansion, Payback & Exit Strategy In addressing this question we look at the Exit Strategy as a definition of our business vision and goals, as well as a contingency in the event the business is unsuccessful. We have addressed this question at several levels: Expansion as a Business Goal We have set multiple financial goals to grow the success of the TFK’S concept, and compound the profit return for TFK’S Investors
1.
Expansion (Option 1): Our overall goal to maintain TFK’S as a unique and eclectic concept. Based on projections, the business has captured market share by the end of the first year. In addition Year 2 brings an increased sales and profit margin to sustain the addition of a full-time General Manager. By second quarter of Year 2, the owners will look to launch a second restaurant concept. This is not a chain, but another unique restaurant concept with strong growth potential. Expansion will be considered with our Financial backers and Investor partners
2.
Expansion (Option 2): Throughout our business plan we have stayed focus that TFK’S would be successful as a larger venue, with greater sales capacity and revenue potential. Our objective with the site selection and lease negotiation is to have the opportunity to expand the restaurant as a logical growth and profit plan.
3.
Private Sale: We are in the business of making money. At the close of Year 3, we see TFK’S as meeting 80.4% of its optimum sales potential with the current seating and space allocation. At this stage the business debt is reduced, profit margins are increasing, and TFK’S has established market share. We will look at the private sale of the majority interest via A) Leveraged Buyout, or B) A larger Restaurant consortium. In both cases, our interest is in delivering healthy profits to our Investors and Financial backers. Sales and profit margins will be based on the restaurant valuation in Year 3.
4.
Financial Solvency: The financial projections indicate that exit will be achievable over 3 years for the operating capital line of credit. Under a realistic scenario the Company should have over Rs.7,00,000 in cash in the bank after income taxes the second year.
Exit Strategy to Retire the Business We at TFK’S are committed to our concept and its viability. We step into this venture with confidence and the success of our respective prior business efforts. No one attempts a business anticipating failure, however sometimes ventures do not fulfill their promise. In the event that our venture cannot achieve profitability and retire the encumbrances, we will first attempt to sell the operation and use the proceeds to clear all outstanding balances.
THE END
